Online lawsuits fuel debate in France

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Attorney Jean-Marc Goldnadel knew he was going to make waves
when he launched classaction.fr - a French website that lets
users sign up to lawsuits online for as little as 12
($A19).

Sure enough, the site has ruffled France's traditionalist
establishment and raised the temperature of a debate on government
plans to let plaintiffs file US-style class actions in French
courts.

But Goldnadel under-estimated the backlash, and even several
consumer groups are trying to shut him down. A verdict is due next
month on their court challenge, the second against the site, and
the Paris Bar Council is scouring its pages for ethics
breaches.

Opponents of the government's plans have also seized on
classaction.fr as evidence that a class action law would encourage
the kind of "excesses" that the US is now trying to curb:
ambulance-chasing lawyers, ruinous damages awards and spurious
lawsuits used to blackmail companies into settlements.

"This is grist for our mill," said Joelle Simon, head of legal
affairs at France's main employers' organisation, Medef. "This is
exactly what we don't want - we have no desire to see this
kind of practice become widespread."

President Jacques Chirac announced the introduction of class
actions earlier this year, but Simon, who represents Medef on a
government advisory panel, cautions that France would do well to
avoid the US model.

"It's an incitement to blackmail," she said. "We know what the
American system costs their economy, and that is one import we can
really do without."

Just as class action lawsuits arrive in Europe - Britain
and Sweden have recently opened their courts to limited forms of
class actions and Italy is considering them - Washington has
been taking steps to rein them in.

US President George Bush signed a law in February making it
harder to file "junk lawsuits" that stand little chance of winning
in court, but sometimes scare companies into settling anyway. Such
suits drove overall U.S. legal costs to $US240 billion ($A316
billion) last year, Bush said.

But French consumer groups say class actions are the only way to
obtain justice when, for instance, a company overbills thousands of
customers by a few hundred euros each - hardly worth suing for
individually.

Whereas a single US consumer can file a class action covering
all those who have suffered the same prejudice, French attorneys
need a signed mandate from each litigant. Rules barring them from
advertising or approaching prospective clients make it almost
impossible to gather plaintiffs.

Goldnadel and his associates work around the restrictions by
getting the clients to come to them. Close to 1000 plaintiffs have
signed up online for two pending lawsuits.

The first accuses film distributors of breaching consumer rights
by copy-protecting DVDs; the second seeks damages for misleading
financial information allegedly given to Vivendi Universal
shareholders.

But French consumer organization UFC-Que Choisir and four
smaller groups are accusing classaction.fr of unlawfully recruiting
clients and requiring plaintiffs to cede control of settlement
decisions.

The site tells visitors who have bought DVDs that "you have
suffered the following prejudices, for which we are demanding
damages in court." It goes on to outline the case, inviting users
to click on a flashing red button to sign up and enter credit card
details. Fees start at 12 up front, plus 40 per cent of
any damages won.

Goldnadel is confident he is operating within the law. "There is
nothing outrageous about telling people they've suffered a
prejudice in a certain way," he said in an interview. "It is an
attorney's job to do that - it's not ambulance-chasing."

Despite its case against the site, UFC-Que Choisir is pushing
for a US-style class action procedure in France that automatically
covers all potential victims unless they opt out.

French employers would rather see a more limited "opt-in" system
obliging attorneys to collect mandates from every plaintiff -
as classaction.fr does. "If a company's involved in a court case,
it should know who it is up against," said Medef's Simon.

Others argue that the more powerful class action procedure would
actually help corporations contain litigation risk.

"It is in companies' interests to have an opt-out system," said
Paris-based attorney Ron Soffer, who is also qualified at the New
York bar.

An opt-out suit usually covered the "vast majority" of possible
plaintiffs, Soffer said. "Once it settles with the class, the
company has basically settled the entire case and will probably
never hear of it again."

But such a major step could require changes to existing French
laws as well as to the constitution. While the government is
keeping quiet before the working group makes its recommendations,
expected this month, comments by ministers suggest their approach
will be gentler.

Finance Minister Thierry Breton has said the government is keen
to avoid the "abuse" of class actions seen in the US. Their
introduction will go ahead "in a French context and in a more
controlled way," he told reporters recently.

"It is a wonderful business for the lawyers, but not always for
the consumer."